Reputational risk in the context of A.M. Best's rating analysis

Abstract

Reputational risk is one of the biggest threats for insurance companies. The promise to provide insurance cover or the promise to pay out an agreed sum at expiry or when an insured dies is based on the trust that a policyholder has in an insurer that it will be able and willing to honour its commitment. Any doubt in an insurer's commitment as a result of financial constraints, but also due to business practices could have a significant negative impact on its business profile. In A.M. Best's view, the management of reputational risk is intrinsically linked to an insurer's overall risk assessment and risk control strategy. © 2006 The International Association for the Study of Insurance Economics.